Ethio Telecom Shareholders Set for First Dividend Two Years After Buying Shares

Tens of thousands of Ethiopians who bought shares in Ethio Telecom about two years ago are now approaching their first dividend, as the telecom operator prepares to decide how much of its earnings it will return to shareholders and how much will remain in the business.

Ethio Telecom CEO Frehiwot Tamiru confirmed that the company’s shareholders are eligible for a dividend, with the General Assembly expected to decide whether the distribution will be made in cash or through additional shares.

The decision comes as the company enters another ambitious phase of expansion, creating a balancing act between rewarding its new investors and retaining capital to fund future growth.

Two years after the share sale

Ethio Telecom was converted into a joint-stock company in June 2024 before offering 10 percent of its shares to domestic investors.

The public offering attracted more than 47,300 shareholders, with over 10.7 million ordinary shares sold during the 121-day subscription period.

For many of those investors, the upcoming distribution will be the first financial return from their ownership.

The company had previously held back dividend payments while completing the required certification process. With that reservation now removed, shareholders are moving closer to receiving a payout.

The remaining question is how the dividend will be delivered.

Cash or shares?

A cash dividend would give shareholders an immediate return on their investment. Issuing additional shares instead would allow the company to retain more value within the business as it continues to expand.

That decision comes at a time when Ethio Telecom is pursuing significant growth targets.

The company reported 215.82 billion birr in revenue for the latest financial year, an increase of 33.2 percent, while gross profit reached 92.9 billion birr.

For 2026/27, it has set a revenue target of 295 billion birr, as it begins the second phase of its three-year “Next Horizon: Digital & Beyond 2028” strategy.

The company is also targeting continued expansion in customers and digital services, including raising Telebirr users from about 60.6 million to 67.69 million and generating 4.19 trillion birr in Telebirr transaction volume.

Those ambitions require continued investment, making the form of the dividend more consequential than a simple payout decision.

Expansion puts pressure on the payout

Ethio Telecom’s three-year plan targets 842.3 billion birr in revenue and 976 million dollars in foreign-exchange revenue.

For the current financial year, the company expects to generate 253.7 million dollars in foreign-exchange revenue while expanding its customer base toward 96.2 million.

The operator is also putting greater emphasis on data and internet services, which have become an increasingly important source of revenue as customer usage shifts toward digital products.

The expansion agenda could therefore influence how much the company is prepared to distribute.

Analyst Mekbib Tesfaye has pointed to liquidity and investment requirements as important considerations in choosing between cash and capitalized dividends. A cash payout provides shareholders with immediate income, while retaining the funds could give the company more resources to finance its investment programme.

Shareholders now have a market price to watch

The dividend decision is also taking place after Ethio Telecom entered the Ethiopian Securities Exchange, making its shares publicly tradable.

The company became the fourth company listed on the ESX secondary market in May.

Its share price has experienced significant movement since trading began, reaching around 800 birr before recently trading in the low-400-birr range.

That gives shareholders another measure against which to assess the value of the dividend.

If the General Assembly opts for additional shares rather than cash, investors will also have to consider how those shares are priced and what the distribution means for the future value of their holdings.

A new relationship between the company and its owners

The first dividend marks a significant change in Ethio Telecom’s relationship with its investors.

When the shares were sold, thousands of Ethiopians became owners of a company that had previously operated entirely under state ownership. Two years later, those investors are beginning to see what ownership means in financial terms.

But Ethio Telecom is also entering a period in which it wants to spend heavily on growth.

The company therefore faces two competing expectations: shareholders want a return on their investment, while the business needs capital to pursue its expansion targets.

The General Assembly’s decision on cash versus additional shares will determine how those priorities are balanced.

For the new shareholders, the upcoming dividend is the first concrete test of their investment. For Ethio Telecom, it is an early opportunity to establish how the company will share profits while continuing to finance its next stage of growth.

Source: Addis Fortune